Part of the Bay Area News Group

Schwarzenegger becomes a budget ‘stunt’ man

By Josh Richman
Wednesday, August 6th, 2008 at 5:42 pm in Arnold Schwarzenegger, General, John Chiang.

Gov. Arnold Schwarzenegger said today he’s going to cross his arms, stomp his foot, hold his breath and turn blue until the Legislature sends him a budget he likes.

Well, not exactly, but close:

“At this point, nothing in this building is more important than a responsible budget and to fix our broken budget system and to create an economic stimulus package, so until the Legislature passes a budget that I can sign, I will not sign any bills that reach my desk,” he said. “That means that some good bills will fail, yes, but we do not have the luxury of stretching this process any longer. The only thing that the Legislature should be focusing on is reaching a budget compromise immediately.”

For context, California’s budget hasn’t been signed by the June 15 constitutional deadline since 1986; a quick search shows me the past 10 budgets were signed on these dates:

  • 2007: Aug. 24
  • 2006: June 30
  • 2005: July 11
  • 2004: July 31
  • 2003: Aug. 2
  • 2002: Sept. 5
  • 2001: July 25
  • 2000: June 30
  • 1999: June 29
  • 1998: Aug. 21
  • So this late date isn’t new, although we are facing a much bigger deficit than usual. But state Controller John Chiang earlier today said that’s not as much of a worry as the governor would have us believe:

    “On Monday, I testified to the Senate Governmental Organization Committee that June revenues provided us with more than $4.2 billion in reserves at the end of September, which is well above the $2.5 billion my office considers a prudent cash cushion. Although I will release the actual cash flow figures in my monthly report later this week, the preliminary numbers from July show that our cash position has further improved, providing added assurance that the State will have the resources to meet its payment obligations for all of September and into October.

    “The Governor based his executive order to cut employees’ salaries to the federal minimum wage on a faulty premise that it would conserve the cash needed to pay our bills next month. Two consecutive months of improved revenues and decreased spending have rendered his executive order to be nothing more than a solution to a problem that does not exist in the immediate future.

    “I have been working with commercial and investment bankers for the past several months to ensure the State can borrow to meet all of our payment obligations, and this news delays our need to borrow by several weeks. In light of our cash flow improvements, I respectfully urge the Governor to reconsider his executive order. To not do so would needlessly subject hundreds of thousands of hard-working public servants to financial harm and add more strain to our already fragile economy.

    “Although the last two months of revenue performance are welcome news, it will not alleviate the need for California to engage in expensive and risky Wall Street borrowing later this year. The only way to avoid this borrowing is with a budget that contains sound revenue and expenditure solutions that are free from get-out-of-town gimmicks.”

    A get-out-of-town gimmick is exactly what this blanket-veto threat seems to be, hot on the heels of his possibly-toothless order to cut state workers’ pay to the federal minimum wage. He’s sounding increasingly petulant as legislative leaders on both sides of the aisle fail to cave to the pressure he tries to exert. It’s a stunt I think people are likely to see worthy of one of his action films, but not of a governor.

    Even his movement off his no-tax-hikes rhetoric — although at least denoting some movement — seems misguided. His proposal to raise the state sales tax by a penny on the dollar for three years would bring in about $5 billion a year, which isn’t even close to the $6.1 billion the state would have in its coffers this year had Schwarzenegger not repealed the Vehicle License Fee back in 2003. And the sales tax is more regressive than the VLF, meaning it has a more disproportionate impact on the poor: The California Budget Project says the state’s poorest 20 percent spent 8.4 percent of their pay on sales tax last year, while the richest 20 percent spent no more than 3.3 percent. And that’s to say nothing of the havoc the governor’s proposal might play with constitutionally mandated Proposition 98 education funding when the sales-tax hike sunsets after three years.

    First he tried to hold state workers hostage, now he’s putting a gun to the head of the very business of government, seeking a budget deal as ransom. If I had to guess, I’d think he’s uncomfortable with giving people any more time to realize how absurd it is that California is one of only three states (Arkansas and Rhode Island are the others) requiring the Legislature’s supermajority support (two-thirds of each chamber voting yes) to pass its budget or tax increases, rather than a simple majority.

    The governor clearly wants the budget done fast. The question is, does he want it done right?

    [You can leave a response, or trackback from your own site.]